[skateari]

$this->bbcode_second_pass_quote('', '"')Even as this was finally admitted, CBS News MarketWatch issued a bulletin saying that US new home sales had fallen sharply in April. That was followed shortly thereafter by another bulletin from another source drawing attention to a sudden and dramatic increase in America’s M3 , credit-based , money supply.

The Federal Reserve has confirmed our Stock Market Crash forecast by
raising the Money Supply (M-3) by crisis proportions, up another 46.8
billion this past week. What awful calamity do they see? Something is up.

This is unprecedented, unheard-of pre-catastrophe M-3 expansion. M-3 is up
an amount that we've never seen before without a crisis - $155 billion
over the past 4 weeks, a $2.0 trillion annualized pace, a 22.2 percent
annualized rate of growth!!! There must be a crisis of historic proportions coming, and the Federal Reserve Bank of the United States is making sure that there is enough liquidity in place to protect our nation's fragile financial system. The amazing thing is, the Fed's actions mean they know what is about to happen. They are aware of a terrible, horrific imminent event. What could it be?"

http://www.safehaven.com/article-1597.htm

[bart]

$this->bbcode_second_pass_quote('JohnDenver', '
')A lot of unsubstantiated crap in the referenced article,

[skateari]

$this->bbcode_second_pass_quote('', 'I')f Kerry is elected and the grownups get back into government, US capitalism has at least few decades left.

[Guest]

$this->bbcode_second_pass_quote('skateari', '')$this->bbcode_second_pass_quote('', 'I')f Kerry is elected and the grownups get back into government, US capitalism has at least few decades left.

[bart]

You may be right in your dire predictions, skateari. There is a chance that the US economy could take a big tumble. Conceivably we could find ourselves in the situation of an Argenitina, a Bolivia or the US in 1933. But, you know what? Argentina, Bolivia, and the US survived. People kept on living. We would keep on living. We would find ways to deal with the problems -- true, we wouldn't be living the high-energy lifestyles we do now.

But with intelligent leadership, we could make it. And in some ways, a low-energy and more frugal lifestyle would be an improvement. Cuba and the state of Kerala in India have shown that it is possible.

We would be living the way most of the world's population does now.

[holmes]

John denver. With a name like that i would think u had more common sense. What is ecomonics based on? Natural resources. Now dont tell me virgin high quality natural resources are not exponentially disapearing.
Believe me i cant stand leftist and rightist propaganda. But the facts are the economy is on borrrowed time. I work and have much invested. it sucks. But i also realize reality.
The world economies are becoming more and more dependent on denuded lower quality resources and in many cases non existent resources.
All as the populations increase and as the natural systems the monetary system depends on decline exponentially.
ecological economics is the only answer.
I do think we have till 2010+- for the natural systems to stop giving back to the dollar.
http://www.fs.fed.us/eco/s21pre.htm
http://www.ecoeco.org/

[trespam]

$this->bbcode_second_pass_quote('holmes', 'e')cological economics is the only answer.
I do think we have till 2010+- for the natural systems to stop giving back to the dollar.
http://www.fs.fed.us/eco/s21pre.htm
http://www.ecoeco.org/

[trespam]

Oops. Forgot to finish.

People have a problem with the word ecological, mainly those who listen to Rush Limbaugh all day long.

[MonteQuest]

I am quite familair with Engdahl's writings and positions. This article spells it out like it is. If you feel it is overly pessimistic, I suggest that you need to do some more homework.

Over the past three years, 200 basis points in FED rate cuts and about $200 billion in additional deficit spending each year have been required just to keep GDP growth where it is. At the end of World War II, the US had the largest net saving position in the world. The US was able to finance GDP growth itself but as the years rolled by ever greater amounts of savings from the rest of the world have been needed. Our savings rate now is down to .6%. To finance itself now, the US needs nearly 80% of the world’s savings.

The US shift from supplier to consumer of global capital began in the postwar decisions to pursue consumption-led growth. This strategy contributed to winning the Cold War by supporting US allies as they rebuilt their economies. During the eight years of the Reagan presidency, the United States moved from being the world's largest international creditor to the largest debtor nation. While Reagan cut taxes, he had to increase borrowing to pay our way. Capisce?

America became a high-consumption, low-savings economy, and this supported employment and political stability in the economies of its high-saving, high-production allies. The problem with this relationship is its success. As long as the rest of the world could not compete with the US as a locus of investment, there was little difficulty in selling dollar debt instruments like Treasury Notes, US corporate bonds, and US equities to foreign savers. Now world investors are massively overweight in dollar assets. Even a moderate decline in demand for US assets would lead to a significant fall in the foreign exchange value of the dollar.

One of the major tenants of the so-called Washington Consensus was to get the rest of the world up to US standards with respect to investor attractiveness. We succeeded. There are many places in the world now other than the US where billions can be invested safely and at high returns. The world’s portfolio managers are overweight in dollar assets and have a natural incentive to diversify out of dollars into euros and yen and other Asian currency assets and emerging economy assets. This forces the Fed to increase the money supply to compensate for declines in the value of the dollar resulting from those sales due to the monetary exchange rate. For example, if a dollar depreciates 50%, it is now worth $.50 in relation to other currencies. So, to compensate the FED has to create, or borrow into existence another $1 to be able to buy the same amount of goods or services.

It’s this higher cost of capital that has the over-leverage crowd wringing their hands. It’s a cost that cannot be offset by Federal Reserve rate policy. In fact, too much monetary expansion can make things worse by causing the dollar to fall even faster, intensifying dollar asset sales by foreign investors and pushing up the cost of capital to private US borrowers even higher, forcing the FED to increase interests rates to offset the inflation.

The housing bubble is an ominous portent, in that the wealth people think they possess is illusionary. Senior citizens are even going out on a limb and utilizing reverse mortagages to finance their economic shortfall with regard to Social Security. Speaking of which, where will the 54 trillion dollars come from to fund Social Security and Medicare?

My position all along is that the FED can no longer control any of this. We may see a return to stagflation where we see a recession occuring in the face of rising inflation due to fuel costs. Much of this hike in fuel costs is fueling a purchase of commodities and other vital resources. The momentum created by all of this easy credit debt has increased demand for energy even in the face of rising prices. Something has to give. A correction has to take place. The Fed knows this but can't really act in fears of stifling economic growth and busting the housing bubble. They are just crossing their fingers. This is all new territory for all of us.

My guess? After the election, things could rapidily go downhill. I've have put in stop loss orders on all my stock holdings, and have crossed my fingers as well.

[MonteQuest]

The Pony in the Manure Story

A family had twin boys whose only resemblance to each other was their looks. If one felt it was too hot, the other thought it was too cold. If one said the TV was too loud, the other claimed the volume needed to be turned up. Opposite in every way, one was an eternal optimist, the other a doom & gloom pessimist. Just to see what would happen, on the twins' birthday their father loaded the pessimist's room with every imaginable toy and game. The optimist's room he loaded with horse manure. That night the father passed by the pessimist's room and found him sitting amid his new gifts crying bitterly.

“Why are you crying?â€

[trespam]

$this->bbcode_second_pass_quote('MonteQuest', 'I') am quite familair with Engdahl's writings and positions. This article spells it out like it is. If you feel it is overly pessimistic, I suggest that you need to do some more homework.

[Guest]

the answer for me is crystal clear

we vote for bush and the economy will collapse in 2005

we vote for kerry and the economy will collapse in 2008

lets have those extra 3 years

[MonteQuest]

[quote="trespam
$this->bbcode_second_pass_quote('', 'I') am familiar with everything you point out. Yet I take issue with articles that discuss "economic collapse" without even defining what they mean by "collapse" and "explode." The question that must be answered: how will the correction take place.

[k_semler]

Presidents do not decide the direction of the economy. The free market, natural limitations, funds available, wars, etc do effect the direction of the economy, but not the president. If the president decided the economic situation, there would never have been a recession, nor would there ever be.

[BastardSquad]

I find it laughable when people start saying "we need to get Bush out of office,Kerry will save the day!"As if one would truely be any better than the other.

IMHO people who want to dump Bush think that Kerry will bring us back to the good old Clinton days,which in hindsight really weren't that good.

From all that I have read,a great deal of the "boom" in the Clinton years can actualy be accredited to economic policies initiated by Bush Sr.You can't turn a bad economy around overnight,Clinton came in just as things were starting to turn around and then took all the credit.

Other things that led to the boom in the 90s were the internet,and the fact that gen-xers went on a spending spree with wreckless abandon.

I'm sure alot of foreigners think Clinton was a great hero,sure,great for them,but not so great for Americans who were supposed to be his first priority.Under his administration China was given all kinds of top secret missle and nuclear technologies which they used to advance their weapons programs by decades.These technologies were then handed to N.Korea who in turn gave them to Iran.

Lets not forget that the whole weapons inspection fiasco that led to the war in Iraq started when Clinton bombed Iraq and then didn't do anything when Saddam threw all the inspectors out.But he loved the U.N. and it's oil for food program,gee now if that's not a global success story I don't know what is!

People talk about the standard of living dropping in the U.S but there are several things people fail to take into account.Thanks to outsourcing we've moved our entire industrial base overseas.There was a time when a guy with little or no education could get a job at GM or some other such place and make a decent living.Another thing we need to take into account is the mass,unchecked immigration from mexico,because they will work for pennies on the dollar they drive down wages for everyone else!

I just can't see there being any significant changes being made no matter who gets voted in.

[trespam]

Without taking the time right now to go through each bullet item, I find the language still extremist, e.g.

Shut-off of consumerism: Noone is talking about shutting it down. It does drive the economy. But what degree of reduction is possible that will avoid "collapse." Let's not forget that we are probably entering an inflationary, perhaps stagflationary environment. This provides plenty of opportunity to reduce the standard of living through inflation of goods without the automatic inflation in salaries. Result: less consumer spending.

Social Security/Medicare: I've still not seen a good analysis that differentiates the two. My understanding is that Social Security can be put on solid ground, with some pain, through say 2075. It is medicare that is the problem. But even with that said, the social security and medicare problems are not occuring in 2005. This article talks about 2005. SS/Medicare are still running surpluses right now. Which the government is spending. The red ink doesn't start until much after 2005.

US dollar: It is already decreasing. And yes, we've seen less investment in the US recently by central banks. So let the dollar fall further. China and Japan have been helping to prop up their economies by investing in treasuries so their currencies will stay competitive. Time for that to end. These economies need to create their own internal consumer markets. And let the dollar fall if we can't put our fiscal house into order. The US currency must be subject to market forces similar to other countries. So be it.

The articles about collapse are similar to a map pointing out the most dense region of mines in a mine field. They say to avoid that region. I agree. They make it sound like we are surrounded by mines in all directions. Perhaps, but they use a few words to describe very complex systems. I'm not willing to give up, to say that there aren't paths through the field that are not less dense with mines.

All the talk in the world does not replace a good model that allows us to evaluate scenarios. I've not seen any models. Though models are always suspect, words are more suspect. I'll believe in global warming based on measurements and models, not the words of a few folks. Similar for economic issues.

In the mean time, I will be moving some money into Euros one way or the other, but with the caveate that even the european community has huge government debts (though not the level of current account deficits).

What I really see: deflation and heavy recession in some areas, inflation in basic commodities including energy. Pain for some, gain for others. Not collapse.

[bart]

$this->bbcode_second_pass_quote('BastardSquad', '
')I find it laughable when people start saying "we need to get Bush out of office,Kerry will save the day!"As if one would truely be any better than the other.

[Jenab]

$this->bbcode_second_pass_quote('trespam', 'Y')et I take issue with articles that discuss "economic collapse" without even defining what they mean by "collapse" and "explode." The question that must be answered: how will the correction take place.

[smiley]

$this->bbcode_second_pass_quote('', 'T')he articles about collapse are similar to a map pointing out the most dense region of mines in a mine field. They say to avoid that region. I agree. They make it sound like we are surrounded by mines in all directions. Perhaps, but they use a few words to describe very complex systems. I'm not willing to give up, to say that there aren't paths through the field that are not less dense with mines.

[trespam]

$this->bbcode_second_pass_quote('Jenab', 'T')he price of artificial fertilizer and fuel for farm machinery will rise too high for mechanized farming to remain profitable, even with government subsidies. At that point, agribusiness will go out of business.